Youngstown to make sure companies keep promises

The city of Youngstown is getting tough with companies that receive tax abatements but fail to live up to the terms of their agreements, such as reporting employment data. However, the move should not be viewed as a change in attitude on part of the administration and council as far as economic development is concerned.
Tax breaks, low-interest loans and free land have enabled Youngstown to compete with suburban communities and even with other parts of the state in terms of job creation and retention.
According to the city's Tax Incentive Review Council, which is statutorily required to conduct an annual review of tax abatement compliance and to issue its findings and recommendations to city council, 49 companies were on the tax-breaks list in 2000, and they created 1,313 jobs of the 1,398 they had promised. They retained 1,797 jobs.
But it is the bottom line that should strengthen city government's resolve to continue and, perhaps, expand the financial incentives program: Companies that received tax abatements paid $2.08 million in income tax.
Business sweeteners: As we've noted on numerous occasions, business sweeteners are a fact of life in the highly competitive world of economic development, and while Youngstown has had to weather some financial storms, its overall record of job creation is noteworthy.
That said, we do believe that companies receiving tax abatements or other incentives must live up to their promises. This is especially true of those recipients approaching the 10-year expiration date for the tax breaks. Many of them received 100 percent abatements.
This year, companies that failed to file equal employment opportunity hiring reports for 2000 were given 30 days to respond. If they don't, the Tax Incentive Review Council will recommend to city council that the abatements be pulled. The city also could pursue collection of taxes already forgiven.
This get-tough approach is permitted under state law -- and is justified. For the past several years, companies have been issued warnings or have been placed on probation for failing to meet job-creation goals or not providing information on jobs created and minority hiring.
Three companies, Airborne Express, Allied Consolidated and Crab Creek Industrial Village, could lose their abatements and have other sanctions imposed against them. In addition, Federal Express and Boston Metals did not report their hiring data but were given a 60-day grace period because the city has not had problems with them in the past.
Probation: Entire-Enviro Inc. was put on probation because its investment fell short of what it had promised, and the tax board gave it until February 2002 to comply.
Many other companies failed to submit complete reports, but their tax breaks are not in jeopardy because the tax council was swayed by their explanations for non-compliance.
There is no doubt that the city of Youngstown must perform a balancing act and thus far it seems to be doing well.